What do I do with unclaimed trust accounting funds if I can’t locate my client?
Lawyers are supposed to act as fiduciaries of client funds, acting in their best interests and protecting their assets. If you are seeing uncleared checks on reconciliations for more than a month or two, you have a duty to look into the funds and try to get them to your client. Additionally, funds may be lingering in trust accounts are a result of unspent retainers or settlement money that has been received.
If you can’t locate your client in order to discuss why the check wasn’t deposited and fix the situation if possible, the funds belonging to your client can’t sit in your trust account in perpetuity. Instead, after proving a due diligent effort to locate your client in order to get the funds to them, you should follow your state’s rules regarding unclaimed funds. Typically they are required to be held for a certain amount of time before being designated as unclaimed and then disbursed to the appropriate entity, which is often the state bar’s foundation to be used for legal aid.
These time periods can be as long as five years or more, in order to ensure the client has been given adequate time to come collect on their account. Other states have limits as low as two years. In certain states, such as Virginia, you are permitted to deduct the costs associated with the search as long as they are reasonable but are not able to charge fees for the service you provided in conducting the search. Be sure to check with your state bar association to find out what the appropriate time frame is and what entity the funds should be given to after the threshold is reached.
1. Answering Your Questions About Legal Ethics